In terms of revenues, the Italian
television market in recent years has
been aligning itself with longstanding
trends throughout Europe, combining
public funding and advertising
revenues with revenues from fee-based
services.

In this landscape, the licence fee, in part
because of the hold on increases
imposed for 2005 and 2006, has
gradually declined in comparison with
total revenues for the system.
Already, the inflows generated by the
various forms of pay TV have exceeded
funding from the licence fee.

Historically, the parameter used to
adapt public funding has been the
programmed inflation rate, and not
the actual rate of inflation, meaning
that not only does it not allow the
company to recover the entire effect of
inflation within the Italian economy, it
also does not consider the significant
pressure on production created by the
level of competition within the
marketplace that has been growing for
several years now.
The Italian licence fee remains the
lowest in western Europe.

It should also be noted that in Italy,
despite the steps Rai has taken to limit
these effects, reliable estimates point to
a rate of evasion approaching 25%, far
and away the highest in Europe, where
the average rate of evasion is 8%, with
a low of 5% in the U.K.
In that regard, we would like to see the
introduction of legislative measures
that would increase the efficacy of
actions to combat evasion, measures
that Rai has requested on numerous
occasions from the competent public
bodies.

In the near future, the Italian
marketplace will, nonetheless, continue
to be funded primarily through
advertising revenues.
However, growth is estimated to come
not so much from the leading terrestrial
broadcasters, for which room for further
growth is highly contingent upon the
limits of market saturation, as from the
satellite monopoly and other new
broadcasters destined to enter the
Italian television market.

Nonetheless, advertising revenues, too,
will be declining in importance in the
context of broadcasting funding, in part
because of the increase in pay-TV
revenues, but also due to a shift in
investment to other emerging media.

The gradual decline in TV advertising
revenues can also be seen over the last
two years in relation to public services.

In a comparison of the leading
European players, we have seen a
general decline in such revenues,
although to varying extents from one
country to another, while viewing
audience has remained fairly stable
and, in Rai’s case, has actually
increased.